Planned Giving

In the same way that we as Christians are taught to set aside our first fruits as thanks to God for the many blessings He provides to us each and every day, so to, we should also consider leaving a portion of our estate, the sum total of all the worldly possessions He has blessed us with throughout our life. And yet, these are just “things” that we’ve acquired over time; what of all the other wonderful blessings of heart and mind that we also receive each and every day. Most importantly, as Christians our greatest blessing is to live each day with the hope and promise of eternal life, through our saviour Jesus Christ. Given all these blessings, how can we not but give thanks? Having a “planned gift” within our estate is a wonderful way of saying thanks to God for one final time, acknowledging the many blessings He’s provided throughout our life. Not only that, but it allows us the opportunity to contribute in a significant way towards a ministry or ministries to which we’ve always had a passion, so that these ministries might continue their work for years to come.

The idea of “Planned Giving” is the making of gifts to a charity, resulting from a planning process which considers the effects of the gift upon a donor's estate. If you are like most people, the common desire is simply to leave everything to family members, often your children or grandchildren. In fact, we have a biblical mandate to care for family, when we read, “If anyone does not provide for his relatives, and especially for his immediate family, he has denied the faith and is worse than an unbeliever.” (1 Timothy 5:8) So we are instructed to provide for our families, but let us not forget that Christ is also a part of our family, and as such, his church should also be considered.

Lastly, it should also be said, that if an individual gives their estate plan some serious thought, they would realize that there may be another significant, unnamed beneficiary to their estate - Canada Revenue Agency. The degree to which Canada Revenue benefits depends greatly on three things:

If your spouse is still living when you die, that is, are you the first or last to die;

The type of assets that make up your estate, namely - home, RRSP’s/RRIF’s, securities, life insurance, second properties, etcetera; and,

If you’ve included gifts to selected charities as part of your estate distribution.

For many people, the largest reported income in their entire life will be on the tax return submitted on their behalf after they have died. Specifically, Canada Revenue Agency considers there has been a deemed disposition of all your assets on the day prior to your death, and as such, those assets are treated accordingly by Canada Revenue Agency guidelines on your final tax return. Given this, in conjunction with the three points above, even with a modest house, some investments, and/or a pension, many estates would be sufficiently large enough to “qualify” for the average Canadian, highest marginal tax rate on earned income, of 45%. Particularly for those individuals who have been diligent about contributing to an RRSP throughout their working lifetime, in death, if there is no surviving spouse to transfer the RRSP/RIF, the entirety of the funds remaining in the RRSP/RIF will be treated as income on your final tax return. Generally, for income levels around $120,000 or more, you will likely be paying taxes based on your provinces highest marginal tax rate, ranging from 37 -47%.

Planned Giving is the inclusion of an estate gift(s) to a charity using a planning process to minimize the effect of the gift upon the donor’s estate by maximizing the tax advantage. With proper planning, the tax benefits generated by a charitable gift offset 45% of the planned gift. Fundamentally, youre either paying significant tax to Revenue Canada, or instead, giving a charitable gift in support of ministry, of which about 45% is returned as a tax credit to the estate.

For a brief overview of Lutheran Foundation Canada and Planned Giving, watch this PowerPoint presentation (you do not require PowerPoint in order to view this show):